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Is it Possible Customers Actually Appreciate Sign-Up Forms?

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sign-up660x440Whether you’re a subscription-based business or an online retailer, collecting customer information helps create more personal, tailored marketing messages—and research has shown volunteering personal information actually creates more favorable responses to subsequent advertising, too. The most common way to collect this information is through registration forms and, typically, some incentive is offered in exchange. Sometimes, visitors receive a white paper or free resource; sometimes they receive a coupon or promotion. This exchange relies on a tendency explored by social psychologists known as “reciprocity”—we are more receptive to a message or request when we’ve been given something by the requester. But not all reciprocity-influenced exchanges occur in the same way. Interestingly, the way they are structured and communicated has a significant impact on their effectiveness.

When a customer is faced with a signup form, he or she engages in what’s known as “mental accounting.” Essentially, the customer begins tabulating the value of the offer and the cost—in terms of information volunteered—to make a judgment of whether the exchange is worthwhile. When the offer and request occur simultaneously, researchers have found this account balancing occurs quickly. As the gap between the offer and request increases, however, the exchange requires significantly greater mental effort—and this is particularly true when obtaining the benefit or offer is independent of the request or cost.

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When such a gap occurs, customers are likely to rely on an “egocentric” bias that causes them to place more value on their own information, regardless of the benefit they may receive as a result of sharing it. This bias because especially strong when customers receive an offer first, for “free,” and are then asked to share information at a later date.

There is a natural extension to this conclusion: When an offer is present alongside a request for information—or in other words, comes at a cost—the perceived value of the offer is greater. This is important for a few reasons. First, this increase in perceived value is associated with an increased likelihood the offer will be used. For retailers offering discounts as a means of encouraging sales, this is a particularly useful conclusion. In addition, by requiring a cost, or sharing of personal information, brands actually heighten the effect of reciprocity.

Finally, research has found that while asking for information after the offer reduces its perceived value, offering a future benefit in exchange for an immediate payment is actually more effective. This has been discussed at length by Dan Ariely and other behavioral economists and is often referred to as the “pain of paying.” For retailers, this means asking for an email today and promising discounts through a newsletter in the future may be more appealing then providing an offer code in the cart and asking customers to create an account at the end of checkout.

Sign-up forms are a common area of focus for testing and optimization—and the common assumption is that reducing or eliminating these forms improves conversion. There’s a lot of evidence for this, but making the process a bit more difficult—by including a reasonable, usable form asking users and customers to volunteer personal information—could actually increase the perceived value of your offer, products, service, and brand.